CBN unveils criteria for participation in 100 for 100 PPP
File: President Muhammadu Buhari with the Vice President Prof Yemi Osinbajo(SAN) and the CBN Governor Mr. Godwin Emefiele as President unveiled the eNaira at the State House Abuja.

By Emma Ujah – Abuja

The International Monetary Fund (IMF) has that the recently launched e-Naira has the potentials for Financial Inclusion and boost Diaspora remittances but could pose risks to Nigeria’s financial stability.

It therefore urged the Central Bank of Nigeria to watch the product with a view to properly managing risks that may arise from the initiative. 

On boosting remittances,  the fund said, “Nigeria is among the key remittance destinations in sub-Saharan Africa, with remittance receipts amounting to $24 billion in 2019. 

“Remittances typically are made through international money transfer operators (e.g., Western Union) with fees ranging from 1 per cent to 5 per cent of the value of the transaction.

ALSO READ: Chidinma called to ask about late Ataga’s Range Rover, security man tells court

“The eNaira is expected to lower remittance transfer costs, making it easier for the Nigerian diaspora to remit funds to Nigeria by obtaining eNaira from international money transfer operators and transferring them to recipients in Nigeria by wallet-to-wallet transfers free of charge. 

“Exchange rate reforms, including a unified market-clearing rate, that reduce the gap between official and parallel market exchange rates would enhance the incentives for using eNaira wallets to send remittances.”

On the risks, the IMF said,  “Like digital currencies elsewhere, the eNaira carries risks for monetary policy implementation, cyber security, operational resilience, and financial integrity and stability. 

“For example, eNaira wallets may be perceived, or even effectively function, as a deposit at the central bank, which may reduce demand for deposits in commercial banks. 
“Relying as it does on digital technology, there is a need to manage cybersecurity and operational risks associated with the eNaira.”

IMF ready to assist

The  Fund said it was available to help with technical assistance and policy advice. 

The organisation disclosed that its Monetary and Capital Markets Department has been involved in the eNaira rollout process, including by providing reviews of the product design. 

It said, “The IMF is ready to collaborate with the authorities on data analysis, cross-country studies, sharing the eNaira experience with other countries, and discussing further evolution of the eNaira including its design, regulatory framework, and other aspects.”

Vanguard News Nigeria


Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.